Back in 2009, Rolling Stone’s Matt Taibbi launched a media indictment of the mega bank’s excesses, famously dubbing the firm a “blood-sucking vampire squid.”

More recently, most of you will have seen or heard about Greg Smith’s op-ed piece last week in the NY Times. Mr. Smith was a middle level derivatives trader at Goldman who resigned with a very public display of disgust with the greed and lack of integrity at Wall Street’s most successful investment bank. Depending on your view, Mr. Smith either demonstrated that he is a man of conviction and principal who walked away from a seven figure pay package, or just another vindictive employee who exited from his employer in a classless manner after allegedly receiving a disappointing year-end bonus.   Indeed, the truth may lie somewhere in the middle.

More important in my mind is the issue that is raised by Mr. Smith.  Is there something fundamentally wrong with Goldman’s business model from an ethical prospective?

I spent a portion of my career - 11 years in London running the European capital raising division for a large bank -  working in Mr. Smith’s environment. Frankly, I did not find his op-ed piece to be very enlightening and it reminds me of the famous line in Casablanca: “I'm shocked, shocked, to find that gambling is going on in here." Really, does anyone think that firms like Goldman Sachs are trying to do anything but make as much money as they can for their shareholders?

At River City Bank we purchase securities on a ongoing basis from investment banks and our philosophy is always “caveat emptor”. We do not believe that they have a fiduciary responsibility to us. We assume that they are looking out for their firm’s best interests, not ours. This is no different to when I go to buy a car. I expect the car dealer to be trying to maximize his profit and it is my job to do my homework, know what the car can be purchased for elsewhere, and negotiate as good a deal as I can for myself. However, I do not expect the car dealer to sell me a “lemon” and, if he does, he should be liable for any loss that I suffer. Likewise, when we buy securities from an investment bank, we are prepared to live with the results – as long as there is clear disclosure of all relevant issues influencing the investment decision and there are no poorly disclosed conflicts of interest as was the case with Goldman’s structuring of the Abacus collateralized debt obligations in 2007.

I believe in capitalism. Most of the investment bankers on Wall Street are smart people, work long hours, and enjoy finding clever solutions to their client’s corporate finance problems. They are also motivated by money. I don’t think that this makes them bad people. Solving their clients problems generally also results in making a lot of money for their firms. I have no problem with that as they are providing a good service for a good fee. Equally, I have no problem with them making a lot of money when they risk their own capital on investments.

However, I also expect everyone to play by the rules and, while there is often no bright line test, act with the highest integrity. At River City Bank, we don’t settle for anything less. We believe that when our customers succeed, we succeed.  If financial institutions fail this last test, they should be held accountable.  Finally, if their investment decisions turn out poorly, they should suffer the losses and not expect any form of crony capitalism to bail them out as occurred for Goldman Sachs in 2008!